Your home is your castle – and likely your biggest asset – and one of the best ways to protect it is with home insurance. And while many things are factored into the insurance rate you pay, you might be surprised that your home’s heating type also affects your price. The fact is, some home heating systems cost more to insure than others. Whether your home is kept comfortably warm by natural gas, electricity, oil, or firewood, your premium will reflect the risk that comes with each.

What are the different ways to heat your home?

Chances are, you didn’t pick how your home is heated. If you get the opportunity to choose (maybe there’s a reno in your future?), you’ve got a lot of options! These include heating your home by:

·      Furnace. Furnace-based heating systems typically use natural gas, propane, oil, or electricity to create warm air that’s sent through your home using ductwork and vents. It’s the most popular way to heat a home – around 51% of Canadian homes are heated by a furnace!

·      Baseboard heaters. Baseboards convert electricity directly into heat. They’re usually installed at the base of a wall (hence the name) under a window. Each baseboard can be set to a different temperature giving you the flexibility to heat each room as needed. About one in four homes (25%) are heated by electric baseboards.

·      Boiler. A boiler system works much like a furnace. It uses natural gas or oil to create hot water or steam that flows through pipes to radiators located in each room. The warmed-up radiators in turn heat the area. Found most often in older homes, boilers heat just 8% of homes.

·      Heat pump. A heat pump uses electricity to move heat around. In the winter it takes heat from the outside air – even when it’s freezing out – and brings it indoors to keep your home toasty. In the summer it does the reverse to keep your home cool! This technology is the newest of the bunch and only 6% of homes in Canada are currently heated and cooled with a heat pump.

Some homes also have a secondary heat source that complements – but doesn’t replace – the home’s need for a furnace, baseboard, boiler or heat pump. These can include:

·      A wood or pellet stove. These are popular with homeowners looking to save money on heating costs or who simply like the look and warmth they give a room.

·      A wood burning or gas fireplace. Fireplaces are mostly used nowadays for ambiance and décor but one of the perks of a wood burning fireplace – like a wood stove – is it’ll come in handy when there’s a power outage.

Why does my home heating system matter to my insurance company?

Heating your home isn’t optional, especially in winter when it can be downright frigid. And, the reality is your home’s heating system – whether you live in a condo, townhome, or house - can cause a fire resulting in a home insurance claim. Here’s why your insurance company worries:

1. House fires

Fires unfortunately happen, and sometimes it’s because of your home’s heating. An estimated 8% of fires in Canada can be traced back to a heating appliance and of these fires, 10% are due to fireplace or woodstove misuse.

2. Oil leaks

Fire isn’t the only concern when it comes to your home’s heating and insurance – oil tanks are, too. Oil tanks have the potential for causing costly environmental hazards if they leak. Really costly. An oil tank leak can cost as much as $500,000 to clean up! If your home is heated with oil, you can bet your insurer will want to know more about it.  

Did you know? About 40% of all oil spills in Canada are from domestic oil tanks used to heat homes.

Whether you have an electric furnace and woodstove combo or a geo-thermal heat pump, there are a few things you should know about how it affects your insurance rates.

What type of heating could prevent you from getting insurance coverage?

Sometimes a risk is too much to take on, even for an insurance company! When this happens it usually involves an oil tank. Oil tanks require special considerations and if ignored could spell trouble. As a result, they might not be willing to insure a home based on its oil tank’s age, location, condition and poor upkeep. And, even if the oil tank is in tip-top shape, you may pay more for your insurance for simply having one. Which leads us to…

Which home heating system is cheapest for insurance?

There’s no one-size-fits-all answer to which heating set-up will give you the best insurance rate. Generally, where you live will determine the options available to you. For example, from British Columbia to Quebec (and the provinces in between), natural gas and electricity are the top two ways to heat a home. Both are relatively safe. In areas where natural gas isn’t an option – like Newfoundland and Labrador and the three maritime provinces – electricity and oil dominate. And oil, as you know, is risky.

What we do know is that you can expect to pay more if you rely on oil to heat your home, or have a wood burning fireplace or stove. The risks are real, and unfortunately, premiums rise and fall with the level of risk involved.

Should I change how I heat my home for insurance purposes?

Swapping out your home heating set-up is no small undertaking and it can get costly. It’s just not always an option. However, if you decide to change how your home is heated, talk to your insurer first. They’ll provide you with insight on possible savings for the different types you might be considering. You’re especially likely to save if you’re switching from an oil-based furnace or boiler to something powered by electricity or natural gas, or you’re getting rid of a fireplace or woodstove.

Did you know? If your home’s heating breaks down, your home insurance policy won’t cover its replacement. Upkeep and maintenance aren’t insured for coverage.

How can I manage my home insurance?

There are many things that go into your home insurance coverage, including how your home is heated. But your coverage shouldn’t leave you in the cold. With Sonnet, we’ll help you every step of the way in understanding why your premium is what it is, the coverage options you have, and ways you can save. Sonnet insurance agents are just a call or click away to help you when it comes to your ‘home sweet home’.